Correlation Between FOODWELL and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both FOODWELL and Shinhan Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FOODWELL and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOODWELL Co and Shinhan Financial Group, you can compare the effects of market volatilities on FOODWELL and Shinhan Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FOODWELL with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and Shinhan Financial.
Diversification Opportunities for FOODWELL and Shinhan Financial
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FOODWELL and Shinhan is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and FOODWELL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FOODWELL Co are associated (or correlated) with Shinhan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Financial has no effect on the direction of FOODWELL i.e., FOODWELL and Shinhan Financial go up and down completely randomly.
Pair Corralation between FOODWELL and Shinhan Financial
Assuming the 90 days trading horizon FOODWELL Co is expected to generate 0.69 times more return on investment than Shinhan Financial. However, FOODWELL Co is 1.45 times less risky than Shinhan Financial. It trades about -0.01 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about -0.02 per unit of risk. If you would invest 508,000 in FOODWELL Co on September 2, 2024 and sell it today you would lose (9,000) from holding FOODWELL Co or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FOODWELL Co vs. Shinhan Financial Group
Performance |
| Timeline |
| FOODWELL |
| Shinhan Financial |
FOODWELL and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and Shinhan Financial
The main advantage of trading using opposite FOODWELL and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL position performs unexpectedly, Shinhan Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Shinhan Financial will offset losses from the drop in Shinhan Financial's long position.| FOODWELL vs. Korea Real Estate | FOODWELL vs. Korea Ratings Co | FOODWELL vs. IQuest Co | FOODWELL vs. Wonbang Tech Co |
| Shinhan Financial vs. Korea Shipbuilding Offshore | Shinhan Financial vs. Ilji Technology Co | Shinhan Financial vs. NewFlex Technology Co | Shinhan Financial vs. Eagle Veterinary Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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